Why the $799 MacBook Air Will Happen

The Web lit up yesterday with reports that Apple will be putting even more pressure on the so-called ultrabook market with a $799 MacBook Air, the first ready-to-use Mac priced that low since the days of the Indigo G3 iMac. It may sound unreasonable--given the source (DigiTimes) and Apple's penchant for profits--but this rumor's not as far-fetched as it seems (you know, assuming Apple ever updates its Macs again).

Back in 2010, when the $999 11-inch MacBook Air hit the market, Apple's estimated margin was about $280--a healthy 28 percent, according to Computerworld's Gregg Keizer, who interviewed analyst Brian Marshall of Gleacher & Co. at the time--meaning Apple could have sold the Air for $799 and still made a profit (albeit a minuscule 10 percent). At the time, however, the 64GB solid-state drive alone cost the company $80 (about $1.25 per gigabyte), "putting that component in a tie with the Intel Core 2 Duo processor as the laptop's second-most expensive part (behind the $18- display)," according to Keizer.

A report last week by X-bit Labs has that price dropping considerably: Component manufacturer OCZ Technology Group has cut price points of its SSD drives to approximately $0.65 per gigabyte, and expects "recent declines in NAND flash pricing to make SSDs more attractive to mainstream applications such as SANs, network appliances, ultrabooks and mainstream servers." Even if Apple pays a few cents more for drives from Samsung, a 64GB SSD drive would cost less than $50, boosting Apple's profits on a hypothetical $799 Air by about 5 percent. (Apple CEO Tim Cook, it should be noted, is an expert in supply chain and manufacturing minutiae, and has no doubt spent many a night and weekend working on getting the rest of the costs down, too.)

But what's worth more to Apple than those precious profit margins is the expansion of the Apple base, which a $799 Air is certain to do. Much like the free iPhone 3GS, a low-priced high-class notebook would bring a new class of users into the Apple fold. Even if Apple has to sacrifice its 20-plus-percent margins, a few million new users will certainly pay off in the long run.